The Conference Board Consumer Confidence Index increased 1.9%
during January (12.4% y/y) to 125.4 following a 4.3% December decline to 123.1,
revised from 122.1. A level of 123.2 had been expected in the Action Economics
Forecast Survey. The indexes are based on 1985=100. During the past thirty
years, there has been a 70% correlation between the level of consumer confidence
and the y/y change in real PCE.

The rise in overall confidence reflected a 4.7% increase
(6.2% y/y) in the expectations index to 105.5 after December's 9.2% decline. The
present situation index reading eased 0.8% (+19.5% y/y) to 155.3 following a 1.0% gain.

The percentage of respondents indicating conditions are
"good" fell to 34.9% this month from December's 35.8%. The percentage
saying business conditions are "bad" edged up to 12.7% from 11.3%. Job
market readings remained firm. Jobs were viewed as "plentiful" by an
expansion high, 37.6% of respondents. Jobs were viewed as "hard to
get" by 16.4%, up slightly from December's expansion low of 16.0%. The net
jobs assessment improved to +21.2, the most favorable since July 2001. The
differential is 97% inversely related to the unemployment rate.

The increase in the overall expectations reading reflected an
increase in the percentage expecting business conditions to improve over the
next six months to 22.0% from 21.6% in December. Those expecting more jobs was
fairly steady at 19.0%, though that was down from the 23.8% expansion high
reached during March of last year. Incomes are expected to improve by a lessened
20.4% of respondents, down from the 22.7% expansion high reached in December.

Expectations for the inflation rate in twelve months fell to
4.6% from 4.8% in December, while the percentage expecting higher interest rates
over the next twelve months increased to 67.8%, a six-month high. Those looking
to buy a home in the next six months plunged to 6.0%, following a significant
strengthening through December.

By age group, confidence increased the most among individuals
over age 55, up 18.7% y/y. Confidence among those aged 35-54 gained 13.5%
y/y, while younger respondents, under age 35, saw confidence decline 1.5% y/y.

The Consumer Confidence data is available in Haver's CBDB
database. The total indexes appear in USECON, and the market
expectations are in AS1REPNA.

A Primer on Price Level Targeting in the U.S. from
James Bullard, President & CEO of the Federal Reserve Bank of St. Louis is
available here.